£3k to spend on your ISA? I think this 5.8% dividend yield’s too cheap to miss

Royston Wild picks out two great income shares that are top buys at current prices.

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For income chasers, PageGroup (LSE: PAGE) is certainly a great buy right now. Its 5.8% dividend yield for 2020 makes it the best-paying of the UK’s listed recruiters. I’d buy shares amid signs of robustness in the UK recruitment market. 

The number of professional job vacancies in London has swelled 16.7% over the past year, says the Association of Professional Staffing Companies. This rise is in spite of the intense Brexit-related uncertainty that has dogged the UK economy in this time.

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Double bubble

Particularly good news for PageGroup is that vacancies in key areas have rocketed recently. While vacancies rose in a number of sectors last year, the number of accountancy roles grew by the largest amount, up 59% year on year. This is a big deal for PageGroup as its Accounting and Financial Services division is its largest by gross profits. It sources more than a third of total profits here.

Other industry data in recent days has underlined the strength of the recruitment market, too. According to agency services provider Sonovate, there were a whopping 8,456 new job agencies created in 2019. This is up 230% from the 2,556 such companies that sprung up at the start of the decade.

Worry over a subdued British jobs market has weighed on the share prices of PageGroup and its peers of late. And so this pair of positive releases should give investors some confidence as we move into 2020, a year that threatens to be dominated by Brexit-linked tension too.

Safe as houses

A quick look at PageGroup’s valuations suggests that there’s scope for some handsome share price gains. Historically speaking, London-listed recruiters have traded at a chubby premium, reflecting their bright growth outlooks driven by international expansion. But right now this FTSE 250 firm trades on a forward price-to-earnings ratio of 14.1 times, comfortably below the UK blue-chip average of around 15 times.

If you’re on the hunt for great value you might want to consider buying shares in MJ Gleeson (LSE: GLE), too. The housebuilder’s share price has surged following the Conservative victory at last month’s general election, a development that gave some near-term certainty to the Brexit issue.

Some strong new year trading details from MJ Gleeson have also attracted investor interest of late. “Demand for our low-cost homes remains strong,” it said, adding that its Gleeson Homes division sold 811 units in the first fiscal half, up 17.4% year on year. Confirmation that conditions have remained rock solid when it unveils full-year financials on Thursday, 13 February, could help its stock to increase further in value.

At recent prices the small cap trades on a forward P/E ratio of 14.7 times. And expectations of more decent dividend growth in the fiscal year to June 2020 results in a fatty 3.7% yield. I’d happily buy this share along with PageGroup for my ISA today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

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